Indian govt hooked onto hashtags for rural banking push

RRBs are mostly sponsored by full-service banks at the backend, NPCI is talking to the banks to help their RRBs by sharing the technology with them.Pratik Bhakta | ET Bureau | Updated: November 30, 2016, 09:21 IST

The “hashtag banking”, started initially for basic banking activities through feature phones, is again getting a major push from the government to be adopted by the rural poor for digital banking, in the wake of demonetisation.

The National Payments Corporation of India (NPCI) had developed the USSD technology (Unstructured Supplementary Service Data)-based service for feature phones through which customers needed to dial *99# and enter short messages for basic banking activities, such as balance enquiry and generating mini statement.

AP Hota, managing director of NPCI, which manages the backend processes of the service, said: “There is a distinct push from the government to increase the adoption of USSD-based banking services for rural people who might not have smartphones. It will enable them to know bank balance, get mini statement and even make peer-to-peer payments through feature phones.”

The payments company is also in the process of getting regional rural banks (RRBs) to start using this service so that the rural poor, suffering due to lack of cash in the system, could undertake basic payment activities through their mobile phones.

“Of the 56 RRBs in the country, 23 have a mobile banking licence from the Reserve Bank of India and we have instructed our staff to help them avail of this service,” said Hota.

Since RRBs are mostly sponsored by full-service banks at the backend, NPCI is talking to the banks to help their RRBs by sharing the technology with them. When smartphones had not become a prominent thing in India, the banks used USSD-based services for mobile banking.

But after the tremendous rise in smartphone penetration in the country, mobile wallets and Unified Payments Interface stole the popular imagination. Last week, the Telecom Regulatory Authority of India (TRAI) had also reduced charges for USSD services to around 50 paise from about1.5.